Supervision and Enforcement in Corporate Governance

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Supervision and Enforcement in Corporate Governance Governance is the process whereby people in power make decisions that create, destroy or maintain social system, structure and processes. Corporate governance is, therefore, the process whereby people in power direct, monitor and lead corporations, and thereby either create, modify or destroy the structure and system under which they operate. Needs for corporate governance • Separation of ownership from management-A company is run by its managers. Corporate governance ensures that managers work in the best interests of corporate owners (shareholders). • Global capital-In the globalised world of today, global capital flows in markets which are well –regulated and have high standards of efficiency and transparency. Good corporate governance gains credibility and trust of global market players. • Investor protection-Investors are educated and enlightened of their rights. They want their right to be protected by companies in which they have invested money. Corporate governance is an important tool for protecting investors’ interest by improving efficiency of corporate enterprises. . • Foreign investments-significant foreign institutional investment is taking place in India. These investors expect companies to adopt globally accepted practices of corporate governance and well developed capital markets. Demanding international standards of corporate governance and greater professionalism in management of Indian corporate substantiates the need for good corporate governance. • Financial reporting and accountability-Good corporate governance ensures sound transparent and credible financial reporting and accountability to investors and lenders so that funds can be raised from capital mark... ... middle of paper ... ...arterly, half yearly and yearly performance and operating results in newspapers. With the above examples and discussion, good corporate governance practices are tedious to implement .this is because they require buy in form people across the enterprises from the boardroom to the shop floor nor do these practices guarantee that business mishaps ,such as fraud will not occur. However the implementation of such practices does provide reasonable assurance that the interest of stakeholders will be protected by management on a proactive basis this is the true spirit of corporate governance. References- • Vasishth and Rajput, Dr.Neeru and Dr.Namita, 2010. Corporate Governance Values and Ethics. 1st ed. Delhi: Taxmann publications (p) Ltd. • Fernando, A.C, 2011. Corporate Governance: Principles, Polices and Practices. 2nd ed. Singapore: Pearson Education Singapore Pte Ltd.

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